Column : Royalty runs in an MNC’s bloodstream

Jan 25 2013, 00:57 IST
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SummaryOn January 22, 2013, the board of Hindustan Unilever announced that it will enter into a new agreement, effective February 1, 2013, with Unilever for the provision of technology, trade mark licence and other services.

to disclosures and voting.

Motherhood statements like “(Unilever) is committed to ensuring that the support in terms of new products, innovations, technologies and services is commensurate with the needs of HUL to win in the market place” should be replaced by hard numbers. What are market practices, what are competitors paying, how much faster than the market can shareholder expect their companies to grow or how much more profitable will the companies now be?

These agreements don’t come to vote, and maybe they should. ACC and Ambuja Cements have set a precedent, but not gone the complete distance. It’s time that only disinterested parties be permitted to vote, and such agreements be approved by majority of minority investors support.

Multinational owners have had a free lunch for far too long.

The author is managing director, Institutional Investor Advisory Services India, a proxy advisory firm dedicated to providing participants in the Indian market with independent opinion, research and data on corporate governance issues as well as voting recommendations on shareholder resolutions. Views are personal

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